THE latest set of indicators show that once again Scotland’s economy is in better shape than that of the UK as a whole – but that provides absolutely no grounds for complacency.
Last week’s labour market statistics showed that Scotland continues to have a higher employment rate and a lower unemployment rate than the UK as a whole. Our youth employment rate has risen year on year, and remains higher than in the UK.
Although our GDP fell in the first quarter of 2012, it did so by much less than in the UK. This fall was driven entirely by a worrying drop in the construction sector, but services and production expanded.
These indisputable facts point to one key truth – that in the areas of the economy where the Scottish Government has the powers to take action, Scotland is clearly outperforming the UK as a whole. But in those areas where responsibility rests with the Westminster Government – in particular, the level of aggregate demand in the overall economy – the austerity policy is clearly not working, and has delivered a UK double dip recession.
The UK economy would clearly benefit from a targeted fiscal stimulus to boost aggregate demand through increased infrastructure spend. This would provide an immediate stimulus to employment and tax revenues and improve the short and long run growth performance of the economy. This would help our embattled construction sector and bring wider confidence back to the economy. It would also not jeopardise cutting the deficit, as this measure would be growth enhancing.
By contrast, the Scottish Government is acting and achieving good results. In the areas within our control – youth employment, support for business, and inward investment – we are using every lever to boost the economy and employment.
Last week’s figures showed us that 10,000 more Scottish young people are in employment than were last year. Of course, youth unemployment is still too high, and one unemployed young Scot is one too many for me.
In government we are investing in opportunities for young people. In total we provide more than £1.5 billion a year for post-16 learning to support young people towards and into work. Through Opportunities For All there will be a guaranteed place in education or training for every 16 to 19-year-old who doesn’t already have a job. We have delivered a record number of modern apprenticeships this year, and will deliver at least 25,000 in each year of this parliament.
The Scottish Government and our agencies are doing all we can within our current powers to strengthen the economy, to create and bring jobs to Scotland, to stimulate growth and to create the most supportive environment for business in the UK. This includes a tax relief package worth more than £500 million this year, which has reduced rates for three out of five business properties in Scotland, and our plans to bring forward a further £105m package of economic stimulus to create jobs and growth.
And in attracting inward investment, “Team Scotland” is punching well above its weight. The latest Ernst and Young report showed that Scotland is the top performing location among all the nations and regions of the UK for achieving inward investment jobs.
This success is borne out by last week’s labour market statistics, which show Scottish unemployment has decreased by 5,000 over the three-month period April to June, with the rate falling to 7.9 per cent – compared to a UK rate of 8.0 per cent. Employment in Scotland rose by 12,000 and the headline rate increased to 71.6 per cent, remaining higher than the UK rate of 71.0 per cent.
In the areas that this government controls, the economy is performing well. And Scotland more than pays its way. Over the five years to 2010-11, Scotland was in a stronger relative financial position than the UK as a whole by a total of £8.6bn.
But although all these figures show that our distinctly Scottish approach to improving the economy is paying dividends, it is not enough. Too many people are still out of work, and too many families are still struggling to pay their bills.
Time and again, this Government has argued for a stimulus to capital investment by the UK Government to boost the construction sector and wider economy. Scottish GDP would have grown in the first quarter of the year if not for the problems that the sector faces, and that is why I have called on the Chancellor to invest an extra £5bn in capital projects, including the “shovel-ready” projects that we have identified in Scotland.
There is no doubt that with the full fiscal powers of independence, the Scottish Government could do even more to strengthen our economy. But in the meantime, there is simply no excuse for further delay from the UK Government.
Once again, I call on them to help, rather than hinder, the process of economic recovery.
• John Swinney MSP is Cabinet Secretary for Finance, Employment and Sustainable Growth